Bill Gaston: Time to raise the state's minimum wage

Published 6:02 pm, Friday, February 1, 2013

With the release of a new study showing more than 20 percent of our state's population living in poverty, and a 45 percent increase in people living below the federal poverty line, it is time for Connecticut to raise the minimum wage.

Our state's current minimum wage of $8.25 has not been raised since 2010. Last year, the state House passed a bill that would have increased the wage to $8.50 an hour and to $8.75 in 2014, but the bill died at the end of the State Senate legislative session.

In the current session, state Sen. and Majority Leader Martin Looney (D-New Haven) is sponsoring legislation SB 56 that calls for a 75 cent increase in the minimum wage for each of the next two years. The bill also calls for requiring the state labor commissioner to adjust the wage to future increases in the consumer price index for urban wage earners and clerical workers.

The business community is already lining up in opposition, arguing that the state's fragile economy militates against an "artificial" increase in worker's wages. Republicans say the bill would hurt already struggling businesses without providing any real help to low-wage workers. They also maintain that raising the minimum wage would only benefit a small group of primarily younger workers.

Are their concerns valid? Would a rise in the minimum wage really stifle hiring, or cause businesses to shed employees? Is it merely a sop to teenagers mowing lawns for extra cash? The evidence suggests otherwise.

According to a study in 2011 by the Chicago Federal Reserve Bank, minimum wage increases actually raise incomes and increase consumer spending. Examining over 23 years of household spending data, the study authors found that every dollar increase in the minimum wage produces an immediate bump in the next year of $2,800 per recipient in consumer purchases of everything from kid's shoes to cars. The Economic Policy Institute (EPI) reported in a 2009 study that even a boost to $9.50 an hour would result in $30 billion a year in new consumer spending.

Opponents of a minimum wage increase claim that lifting the wage floor would keep employers from hiring, but the real reason why businesses aren't hiring is weak consumer demand. Raising the spending power of millions of low wage workers would immediately put those pay increases back into the local economy, creating jobs, jump starting economic growth and elevating scores of hardworking Connecticut families above poverty level income.

According to a recent EPI study, a two-stage, $1.50 per hour increase would create or support more than 1,500 jobs in Connecticut by injecting demand in those communities where demand has been most sluggish due to lost jobs, wage cuts and inflation that has shrunk the purchasing power of working families.

Often overlooked in the minimum wage debate is how far behind the minimum wage has fallen relative to inflation. Since 1968, the minimum wage has lost nearly 50 percent of its value. In Connecticut, according to the Connecticut Voices for Children, a progressive think tank, the minimum wage has fallen 9 percent in real terms since 1979, while the median wage has increased 21 percent and those in the top 10 percent enjoyed a 46 percent increase.

You can now work 40 hours a week at the minimum wage and still earn far less than the federal poverty line. If the minimum wage had kept up with the cost of living, it would be $10.50 an hour, and just above the poverty line.

With a quarter of all jobs in America now paying wages below the poverty line -- according to the Bureau of Labor Statistics 7 in 10 job occupations over the next decade will be low wage -- a minimum wage increase will lift the incomes of growing sectors of the Connecticut economy. That means more money in the pockets of cashiers, waiters and waitresses, and retail salespeople.

While the real annual wages of the top 1 percent of earners grew 8.2 percent from 2009 to 2011, wages for the bottom 90 percent have continued to decline, eroding by 1.2 percent in real terms in the same time period. It is hard to imagine keeping the economy moving ahead when so many families are struggling to get ahead.

And contrary to longstanding conservative canards, of the more than 226,000 workers that would benefit from the minimum wage increase, most are not teenagers, but adults who work more than half time. EPI estimates that 82 percent of the low-wage workers whose wages would improve directly or indirectly as a result of the minimum wage increase (one in seven Connecticut workers) are aged 20 or older, and 74 percent work at least 20 hours/week.

Polls show that raising the minimum wage is immensely popular. According to a recent John Zogby poll, 70 percent of likely voters support such a raise, including 54 percent of Republicans. Likewise, last November's "American Values Survey" by the Public Religion Research Institute showed two thirds of Americans in favor of a $10-per-hour minimum.

Building a strong economy in the state of Connecticut on the foundation of downwardly mobile wages and ever increasing poverty is a recipe for failure. It's long past time Connecticut raise the minimum wage.